European Commission fines Qualcomm for predatory pricing

European Commission fines Qualcomm for predatory pricing

The European Commission has imposed a fine of EUR242,042,000 on Qualcomm for abuse of dominance through predatory pricing of its UMTS chipsets between 2009 and 2011.

The Commission found that Qualcomm sold three of its UMTS chipsets below costs to Huawei and ZTE, with the aim of eliminating Icera, its main competitor at the time in a segment of the market offering advanced performance.

The fine represents 1.2% of Qualcomm’s 2018 revenues.  The Commission also ordered Qualcomm not to engage in practices with a similar purpose or effect.

Predatory pricing occurs where a dominant company sells below cost in order to eliminate competitors or deter entry, enabling it to further increase its market power.

In AKZO the EU Court decided that:

•             where prices are below average variable cost, predatory behaviour is presumed;

•             where prices are above average variable cost but below average total costs, predation is established if there is evidence of an attempt to eliminate a competitor;

•             prices above average total cost will not generally be predatory.

Predatory pricing is a difficult area to prove, not least since the claimant will not have full visibility on the costs of the dominant company so may be forced to rely on its own costs as a proxy.  Such costs may not be comparable to those of the dominant company where the complainant is not vertically integrated.  Also, not every sale below cost will be predatory because there may be an objective justification.  Extensive cost data are required and there is generally a need to establish at least some degree of intent to exclude a competitor from the market or limit its growth. 

Under EU competition law, unlike in the United States, there is no legal requirement to show a serious probability of recoupment.

It appears that the Commission has concluded that Qualcomm priced below its average total costs but higher than its average variable costs.  The traditional EU approach to predatory pricing indicates that where that is the case, the Commission will rely on internal documents to substantiate its theory of harm.

The case suggests that traditional antitrust enforcement tools are still relevant even in dynamic and innovative markets.



Qualcomm (Predation) (Case AT/39711).

Commission press release IP/19/4350.